Research On Legal Regulation Of Pension Fund ESG Investment Risk

With China’s aging population and increasingly severe ecological environment,pension funds must change their investment philosophy to better achieve balance of income and expenditure,ensure intergenerational equity,and promote ecological protection.In order to cope with the expenditure pressure of pension funds and leverage their social function,investment in pension funds should balance economic and social benefits.Environmental,Social and Governance(ESG)investment has the characteristics of emphasizing sustainable development,pursuing long-term value investment,and helping investors avoid investment risks.The financial characteristics of China’s pension funds determine that they must make long-term value investments,which is in line with the ESG investment philosophy.As an important ’life saving money’ for insured individuals,the investment and operation of pension funds are related to the quality of each individual’s pension.Unlike ordinary commercial investments,safety and value preservation and appreciation are the most basic requirements for pension fund investments.Therefore,pension fund ESG investments need to avoid their investment risks even more.In order to respond to the practical needs of the development of ESG investment in pension funds in China,examine the risks of ESG investment in pension funds from a legal perspective,and respond to the development difficulties of ESG investment in pension funds,it is necessary to regulate the legal risks of ESG investment in pension funds.To this end,targeted analysis can be conducted on the risk evaluation system,risk information disclosure system,risk supervision system,and risk responsibility bearing system.By studying the practical difficulties of various systems,specific measures for improving the system can be proposed.The ESG investment risk evaluation system for pension funds is the logical foundation and starting point of legal regulation of ESG investment risks for pension funds.Improving the risk evaluation system of pension fund ESG investment is conducive to responding to the pension fund green finance policy,promoting the mandatory disclosure of ESG investment risk information by listed companies,providing investors with risk evaluation criteria for ESG investment,and also helping to enhance the risk resistance of the securities market.The ESG investment risk evaluation system for pension funds needs to legalize its risk evaluation subject to ensure its authority;Differentiate risk assessment by industry type to address different industry characteristics and business models;The content of risk assessment should be standardized to ensure consistency between evaluation standards and results.The disclosure system of ESG investment risk information in pension funds is a necessary link in the legal regulation of ESG investment risk in pension funds.Improving the disclosure system of ESG investment risk information in pension funds,firstly,ensures the operability of legal regulations on ESG investment risk information disclosure in pension funds,better establishes specific institutional regulations on investment risk information disclosure,and secondly,ensures the safety of legal regulations on ESG investment risk in pension funds,providing necessary risk information disclosure for investment risk supervision.The ESG investment risk information system of pension funds should promote the transition from voluntary risk information disclosure to semi mandatory risk information disclosure to address the dilemma of insufficient mandatory investment risk information disclosure;Clarify the responsibilities of the obligor for disclosing investment risk information;Targeted determination of the scope of risk information disclosure to address the phenomenon of "greenwashing" in the content of risk information disclosure;In addition,it is necessary to establish a negative list mechanism for pension funds to address the dilemma of insufficient punishment mechanisms for risk information disclosure.The regulatory system for ESG investment risks in pension funds is the main link in the legal regulation of ESG investment risks in pension funds.The risk supervision of ESG investment in pension funds is a key point,and the government’s guarantee responsibility is the potential reason for its risk supervision.The interests of its beneficiaries are the fundamental purpose of supervision,and the risk supervision system is conducive to ensuring the integrity of the pension fund investment supervision system.The ESG investment risk supervision system of pension funds should strengthen the requirements for the prudential obligations of risk managers to address the risk of the lack of regulatory mechanisms for the prudential obligations of managers;Differentiate risk regulation by industry to address the differentiation of risk regulatory targets due to industry differences;Improve the risk supervision system and enable the government to better fulfill its responsibility to support market rationality;Strengthen external regulatory mechanisms,such as actively introducing external audit mechanisms and enhancing the role of social supervision mechanisms.The risk compensation and relief system of pension fund ESG investment is the last line of defense for the legal regulation of pension fund ESG investment risk.The pension fund relies on the trust mechanism to "enter the market".For the illegal acts in the pension fund trust,a sound risk compensation and relief system must be established to prevent the abuse of the power of the pension fund trust subject and promote the healthy and standardized operation of pension fund trust.The pension fund ESG investment risk compensation is a special trust system,which is mainly for the normal investment risk compensation system,and is a special design of the pension fund trust system.Improve the risk compensation of pension fund ESG investment,such as increasing the amount of risk compensation,compensating for different risks in the investment industry,improving the compensation cycle and improving the compensation insurance mechanism.The risk relief system is mainly aimed at compensating the beneficiaries of the pension fund for losses caused by the trustee,investment manager,and custodian’s breach of fiduciary obligations to the pension fund.In the ESG investment trust mechanism of pension funds in China,the trustee is in the core position.The trustee of pension fund ESG investment trust has investment discretion and should also bear corresponding mandatory obligations.Any investment plan of the ESG investment trustee of the pension fund must comply with the requirements of fiduciary obligations.In addition,if their improper investment behavior causes losses to the assets of the pension fund,they should bear compensation responsibility to the pension fund,and their accountability reasons and paths will be handled differently depending on the specific situation.Based on this,the above institutional design can help transform the ESG concept into an effective conceptual tool for pension fund investment,better measure the comprehensive benefits of ESG investment in pension funds,and avoid ESG investment risks in pension funds.At the same time,based on China’s actual situation,enrich and improve the theory of legal regulation of ESG investment risks in pension finance in China,and explore a legal system for ESG investment in pension funds with Chinese characteristics.